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27 Jan 2016
Guide to FOMC members: Hawks vs doves in 2016 – Westpac
FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, suggests that the new FOMC voting rotation votes for the first time this week, with the hawks seeming to gain a little more sway in 2016.
Key Quotes
“Washington DC-based Board of Governors (always voters on FOMC):
Janet Yellen, Chair
Stanley Fischer, Vice Chairman of Board of Governors
Jerome Powell
Lael Brainard. Brainard's experience in international finance and economics as a former Treasury official informed a key speech in Oct 2015 in which she argued the case for erring on the side of caution when raising interest rates. More recent commentary has been in line with that speech.
Daniel Tarullo. In Nov 2015, Tarullo said the Fed is "not close" to meeting its inflation target and said it "might be better to wait for some more tangible evidence" that inflation was picking up before raising rates. However he and Brainard voted for the Dec hike, apparently content with new statement language highlighting "the current shortfall of inflation from 2 percent."
Vacant but in Jan 2015 President Obama nominated Allan Landon for the position. Landon's background is in community banking.
Vacant but in July 2015 President Obama said he would nominate Kathryn Dominguez, a professor of economics at the University of Michigan.
New York Fed president (always votes): Bill Dudley (Vice Chairman of FOMC). Very much in line with Board of Governors, especially Yellen.
Voting regional presidents in 2016:
HAWKS: Esther George, Kansas City. Following the FOMC's decision to hold steady in Sep 2015, George said she has supported an increase in interest rates "for some time this year," implying she would have dissented at some point.
Cleveland Fed president Loretta Mester. In early Jan, she said the Fed has "built in a weakening of China" and that volatility is part of the nature of financial markets. Mester did not see "significant risk" to the US economy.
CENTRIST/HAWK: St. Louis Fed president James Bullard. Often draws headlines with unusual views and is generally centrist but in 2015 was consistent in calling for higher interest rates, leaning a little hawkish. He declared the steady hand in Sep to be "probably a mistake." In Jan 2016 however his centrist tendencies returned as he noted the threat to inflation of renewed oil price weakness and declared the fall in inflation expectations "worrisome."
DOVE: Boston Fed president Eric Rosengren. In his 2013 voting rotation, Rosengren was consistent, maintaining the dovish tradition of the Boston Fed. He sounded more centrist ahead of the Dec 2015 rate hike, noting the stronger job market and retailing spending. However this month Rosengren argued policymakers should "take seriously the potential downside risks to their economic forecasts."
Voters at 2017 FOMC meetings:
There are three newly appointed Fed presidents due to vote for the first time in 2017. Dallas Fed president Robert Kaplan so far sounds less hawkish than his predecessor Richard Fisher. In Nov, he said the FOMC decision in Sep and Oct to wait for more data was "prudent." The woes of the oil industry may or may not be a factor in this. In Jan 2016 Kaplan said he expects to be a centrist in his time at the Fed.
Former Treasury official and PIMCO MD Neel Kashkari replaced Narayana Kocherlakota (who had been the most dovish FOMC member) as Minneapolis Fed president in Jan 2016. He is expected to return the Minneapolis Fed to its historically hawkish leaning and contribute in terms of financial market experience.
Philadelphia Fed president Patrick Harker commenced his role in July 2015. In his first speech on monetary policy in Dec 2015, he called for the funds rate to be "raised sooner rather than later." This was a centrist view ahead of the Dec FOMC meeting.
DOVE: Charles Evans, Chicago. Evans said this month that while he didn't dissent against the Dec 2015 rate hike, he "would have been quite pleased to have not raised rates in December." He said he expected 2 rate increases in 2016, compared to the Dec 2015 FOMC median projection of 4.
Non-voters in 2016 and 2017:
HAWK: Jeffrey Lacker, Richmond. He was true to his hawkish stripes in his 2015 voting rotation, dissenting in favour of a 25bp rate rise in both Sep and Oct. Lacker said this month that he expects the Fed will need to increase the funds rate at least 4 times in 2016.
CENTRISTS: Dennis Lockhart, Atlanta. One of the best policy bellwethers in 2015. In early Aug Lockhart said there was a "high bar" to not raising rates in Sep. But by 28 Aug at Jackson Hole, the China-led financial market turmoil meant he was "less resolute" about a Sep 2015 hike. Lockhart joined the unanimous vote for the Dec 2015 hike. In Jan 2016, he said further tightening was likely to be warranted, though probably not as many as 4 hikes this year.
John Williams, San Francisco: Originally somewhat dovish but since early 2013 has been right in line with the majority. Any attempt to label him a dove is outdated and misleading. Williams was supportive of the Dec 2015 rate hike for months in advance. In Jan 2016 he played down the impact of volatile markets, saying he did not have a Bloomberg terminal on his desk, preferring a longer term focus. He admitted concern over the global economy but was upbeat on US jobs and inflation.”
Key Quotes
“Washington DC-based Board of Governors (always voters on FOMC):
Janet Yellen, Chair
Stanley Fischer, Vice Chairman of Board of Governors
Jerome Powell
Lael Brainard. Brainard's experience in international finance and economics as a former Treasury official informed a key speech in Oct 2015 in which she argued the case for erring on the side of caution when raising interest rates. More recent commentary has been in line with that speech.
Daniel Tarullo. In Nov 2015, Tarullo said the Fed is "not close" to meeting its inflation target and said it "might be better to wait for some more tangible evidence" that inflation was picking up before raising rates. However he and Brainard voted for the Dec hike, apparently content with new statement language highlighting "the current shortfall of inflation from 2 percent."
Vacant but in Jan 2015 President Obama nominated Allan Landon for the position. Landon's background is in community banking.
Vacant but in July 2015 President Obama said he would nominate Kathryn Dominguez, a professor of economics at the University of Michigan.
New York Fed president (always votes): Bill Dudley (Vice Chairman of FOMC). Very much in line with Board of Governors, especially Yellen.
Voting regional presidents in 2016:
HAWKS: Esther George, Kansas City. Following the FOMC's decision to hold steady in Sep 2015, George said she has supported an increase in interest rates "for some time this year," implying she would have dissented at some point.
Cleveland Fed president Loretta Mester. In early Jan, she said the Fed has "built in a weakening of China" and that volatility is part of the nature of financial markets. Mester did not see "significant risk" to the US economy.
CENTRIST/HAWK: St. Louis Fed president James Bullard. Often draws headlines with unusual views and is generally centrist but in 2015 was consistent in calling for higher interest rates, leaning a little hawkish. He declared the steady hand in Sep to be "probably a mistake." In Jan 2016 however his centrist tendencies returned as he noted the threat to inflation of renewed oil price weakness and declared the fall in inflation expectations "worrisome."
DOVE: Boston Fed president Eric Rosengren. In his 2013 voting rotation, Rosengren was consistent, maintaining the dovish tradition of the Boston Fed. He sounded more centrist ahead of the Dec 2015 rate hike, noting the stronger job market and retailing spending. However this month Rosengren argued policymakers should "take seriously the potential downside risks to their economic forecasts."
Voters at 2017 FOMC meetings:
There are three newly appointed Fed presidents due to vote for the first time in 2017. Dallas Fed president Robert Kaplan so far sounds less hawkish than his predecessor Richard Fisher. In Nov, he said the FOMC decision in Sep and Oct to wait for more data was "prudent." The woes of the oil industry may or may not be a factor in this. In Jan 2016 Kaplan said he expects to be a centrist in his time at the Fed.
Former Treasury official and PIMCO MD Neel Kashkari replaced Narayana Kocherlakota (who had been the most dovish FOMC member) as Minneapolis Fed president in Jan 2016. He is expected to return the Minneapolis Fed to its historically hawkish leaning and contribute in terms of financial market experience.
Philadelphia Fed president Patrick Harker commenced his role in July 2015. In his first speech on monetary policy in Dec 2015, he called for the funds rate to be "raised sooner rather than later." This was a centrist view ahead of the Dec FOMC meeting.
DOVE: Charles Evans, Chicago. Evans said this month that while he didn't dissent against the Dec 2015 rate hike, he "would have been quite pleased to have not raised rates in December." He said he expected 2 rate increases in 2016, compared to the Dec 2015 FOMC median projection of 4.
Non-voters in 2016 and 2017:
HAWK: Jeffrey Lacker, Richmond. He was true to his hawkish stripes in his 2015 voting rotation, dissenting in favour of a 25bp rate rise in both Sep and Oct. Lacker said this month that he expects the Fed will need to increase the funds rate at least 4 times in 2016.
CENTRISTS: Dennis Lockhart, Atlanta. One of the best policy bellwethers in 2015. In early Aug Lockhart said there was a "high bar" to not raising rates in Sep. But by 28 Aug at Jackson Hole, the China-led financial market turmoil meant he was "less resolute" about a Sep 2015 hike. Lockhart joined the unanimous vote for the Dec 2015 hike. In Jan 2016, he said further tightening was likely to be warranted, though probably not as many as 4 hikes this year.
John Williams, San Francisco: Originally somewhat dovish but since early 2013 has been right in line with the majority. Any attempt to label him a dove is outdated and misleading. Williams was supportive of the Dec 2015 rate hike for months in advance. In Jan 2016 he played down the impact of volatile markets, saying he did not have a Bloomberg terminal on his desk, preferring a longer term focus. He admitted concern over the global economy but was upbeat on US jobs and inflation.”